Your Euro Gift From Santa

If you're holding euros, congratulations: Santa is getting ready to give you a gift.

That's the view of George Saravelos, a currency strategist at Deutsche Bank.

"For all the uncertainty around the global economy, data has followed a remarkably consistent pattern since 2009: it has weakened sharply over the summer months but bounced strongly into winter," he says. And there's more good cheer: Saravelos says the market has yet to fully price in the reduced likelihood of a messy euro zone meltdown.

These factors will boost risk appetite going into the holidays and year end, Saravelos says, and the euro in particular stands to gain. Rebalancing by Asian central banks and low real interest rates in the U.S. will also boost appetite for the common currency, he says, and he sees value in trading it against a number of currencies.

The trade Saravelos likes most is buying the euro against the Swiss franc. Yes, the franc is pegged to the euro right now, and the pair is trading close to the limit of what the Swiss will tolerate. But Saravelos thinks that will soon change.

Credit Suisse and some other large Swiss banks this week started charging fees and paying negative interest rates on interbank deposits. So far the move has had little effect on the Swiss franc. But Saravelos notes that risk-sensitive European assets have been in favor lately, and large speculative inflows into the Swiss franc earlier this year are ripe to be unwound. A broader move toward negative interest rates could be the trigger, he says, and a weaker Swiss franc would be the result.

What kind of move in euro against the franc does Saravelos anticipate? "We continue to think that the 1.20-1.22 range should not be taken for granted," he says, "with a potential for an extension to at least 1.25."